NEW YORK (TheStreet) -- The big news this week on Long Beach Island, N.J., is the fact that Food Network show "Restaurant: Impossible" has been busily transforming the LBI Pancake House, one of the many businesses that was severely affected by Hurricane Sandy.
Host Robert Irvine has been working his magic not only on this LBI dining fixture, but also on the kitchen at the nearby Ship Bottom Volunteer firehouse; also destroyed by Sandy. The restaurant is scheduled to reopen tomorrow morning, and I hope to be there when it does.
Indeed the terms "Restaurant: Impossible" are an accurate description of what is one of the more competitive, and tougher businesses to operate successfully. Just take a look at what Denny's (DENN) went through several years ago, a bankruptcy, then a very long, difficult climb to its recent successes. It's easy to lose focus, as customers tastes change, and recipes become stale. Domino's (DPZ) found that out a few years ago, but hit it head on with an imaginative advertising campaign admitting that its pizza needed much improvement. Since the recipe change, shares have prospered, having nearly quadrupled since 2011. Some chains are not so fortunate; and the road has been littered with failed restaurant ventures.
The costs of running restaurants are high, with labor costs and food costs ranking either first or second, depending on the particular chain. Food costs are prone to inflation, and when combined with labor costs you have the makings of some potentially thin margins. That does not mean that's there's no money to be made; some chains are very profitable, but that can turn on a dime.
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